What is a startup?
According to investopedia, a startup is defined as a company in its early stages of operations. Founded by entrepreneurs who want to develop a product or service they believe is in-demand and hopefully underserved.
What does it do?
Basically it’s a new company working to solve a pain problem or do the same thing currently done in the industry, but in a different way to offer more convenience.
Think of the taxi business for example, ride services like Uber and Bolt disrupted that industry by eliminating the inconveniences associated with taxis.
Why are startups important?
Looking at our current unemployment rate among the youth (15-34 years) which sits at 45.5% according to Stats SA, it’s obvious that job creation is deeply needed in South Africa, and that’s where bold and visionary entrepreneurs come in. If we want jobs, then some of us have to create them through startup companies.
How can you get started?
According to investopedia, these are the steps to follow when considering to start your own startup company:
- Have a great idea.
- Conduct a thorough market research, to identify the viability of your idea.
- Create a business plan that outlines your company structure, goals, mission, values and objectives.
- Register your business and obtain any licences and permits required by the kind of business you want to do.
- Probably the most important step is to obtain funding. Either through your savings, friends, family, investors, crowdfunding or business loans/grunts.
- Establish a business location (is it online or a physical store or an office or a factory?)
- Create an advertising strategy to attract new customers.
- Establish a customer base and adapt as your business grows.
Examples of successful startups you might know locally are:
YOCO, which is a fintech company based in Cape Town, that provides point-of-sale and payment solutions for entrepreneurs and business owners. Founded in 2015 by Katlego Maphai (CEO), Lungisa Matshoba, Carl Wazen, and Bradley Wattrus. It employs 501-1000 people plus 498 associated members.
Matt Brownell, a fractional CMO and brand advisor had this to say about working at YOCO; “you won’t find another business that cares about it’s customers more, learning from them and building products to make their lives easier. More than ever, this country needs small businesses to thrive. There’s no better place to help that mission than at YOCO.”
Another popular fintech startup is Ozow, a company also based in Cape Town, that offers payment solutions like, instanf ETF and secure online payments. Founded in 2014 by Thomas Pays (CEO), Lyle Eckstein and Mitchan Adams. It employs 51-200 people plus 139 associated members.
According to their story on the Ozow website; Thomas had an idea of how to improve the payments landscape of South Africa, but he needed someone with the technical know-how to help him make it real. And that’s where Lyle Eckstein and Mitchan Adams came in.
The first few years weren’t easy, because the founders faced many challenges. They decided that to keep the business afloat they wouldn’t take salaries. Thomas even had to sell personal assets just to keep the dream alive.
Thomas said, “There were many failures along the way, but we constantly reminded ourselves that every time we didn’t give up, someone else did and that took us one step closer towards becoming the market leader.”
Last but not least, we have Naked insurance. Which is also a fintech startup that offers a digital insurance for cars, homes and every item in them, minus the waiting process and paperwork. Based in Johannesburg, it was founded in 2016 by Alex Thompson and Sumarie Greybe, it employs about 51-200 people plus 128 associated members.
In one interview, Alex said in advice to the next entrepreneur out here; “getting ones market and proposition very clear and try to be quite specific earlier on… Really getting to know the individual customer profile that you’re trying to target and going to school on that profile and delivering big value…”
He also mentioned that on the other hand, you have to know whether the market will be broad enough to eventually scale your business globally.
What challenges will you face?
There are many challenges that an entrepreneur will have to face in South Africa, but the big one is access to capital or funds.
However there are some agencies and organisations that offer support and relief. One good source of information is Swoopfunding.com, which has valuable directions that entrepreneurs can benefit from.
There are hundreds of business grants and government-based finance options available in South Africa. With many aimed at specific industries, community groups or types of businesses. If you’re a startup or small business you’ll be able to choose from the following:
The IDC (Industrial Development Corporation), SEFA (Small Enterprise Finance Agency), SEDA (Small Enterprise Development Agency), NEF (National Empowerment Fund), and TIA (Technology Innovation Agency).
In short, startups aren’t for everyone. It takes a certain kind of entrepreneur to make it through the long hours of research and development, raising capital, creating a sound business plan and model, hiring key talent, and never losing sight of the vision.
Now tell us, are you that entrepreneur?
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